-The above figure shows the demand curve for movie rentals from Blockbuster. If Blockbuster raised its price from $2.50 to $3.00 per movie, between these two prices the price elasticity of demand equals
A) 2.0.
B) 0.8.
C) 1.2.
D) 0.5.

Question

-The above figure shows the demand curve for movie rentals from Blockbuster. If Blockbuster raised its price from $2.50 to $3.00 per movie, between these two prices the price elasticity of demand equals
A) 2.0. 
B) 0.8. 
C) 1.2. 
D) 0.5.

Quizplus · Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. If the demand curve is linear, the elasticity can be estimated using the midpoint formula.

-The Above Figure Shows the Demand Curve for Movie Rentals